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 The Law of Cycles     

LL Cotton

 

 


   Early on in my life, as I was studying to be an electronic engineer, I documented that I saw a particular result of all energy systems that happened over and over again. I called it the Law of Cycles because every system in which an energy component was present exhibited a reversal component causing the system to display a "cycle". And this cycle continues back and forth until reaching equilibrium, or an outside influence added energy to the system to enhance the value to the system's exhibited cycle. In electronics we learn that a plotted result of any electronic signal will exhibit an increase in amplitude, until it reaches resistance, then decreases and passes through equilibrium,  goes negative until reaching resistance and reversal. This continues with decreasing amplitude until equilibrium, or a plotted straight line. In electronics, this is sometimes referred to as "ringing". The lost of amplitude is attributed to heat created from the loss of energy in the system.

   My observation was that all systems exhibited this same behavior; day and night, ocean tide, a swinging pendulum. All energy systems exhibit this character. A plucked guitar string, or even a rubber band will exhibit this characteristic, eventually becoming still, unless it was plucked again.

   I later applied this Law of Cycles to trading commodities, which helped me to understand actions in the market. It is obvious to me as a trader that this system of thousands of people trading does in fact exhibit this same law. However, in researching this phenomenon, I was unable to find a documented law.

   Recently, I did find this white paper by by Michael McGinnis, published on the Internet which expands my explanation.


A law is anything we see that happens over and over again in nature. Some laws are pretty simple, like the law of gravity, which says that all objects feel a force of attraction for other objects. You don't have to go to school to know about this law. Even young children soon learn about gravity if they fall from a height.

Knowing that a law exists is very helpful, because it helps to know what to expect. One law that we have neglected in our society is the law of cycles, which says that events happen in a repetitive way with a time of increase, stability, decrease and then increase again.

Our ancestors knew the law of cycles much better than we do. They knew that in some years there was lots to eat, and at other times there might be starvation. That some years were very mild, and some were very stormy or cold. That many animals such as hares go through dramatic population cycles, building up gradually to a high level, and then crashing to a low point to start rising again. But that whatever condition you had, they knew that nature's clock would bring them to the other side of the cycle when the condition would change.

Nowadays, we tend to lose sight of this basic law of nature. In this century we have grown to rely on our national government and our technology. We have begun to believe that our standard of living, our income, our health and our well-being should always improve. And many of us are surprised and angry when the government cannot reverse economic downturns, or improve the health of the people or prevent the average person's income from falling from what it was 10 years ago. Our technology has been able to reduce or delay the effects of the law of cycles, but the law is still operating.

If cycles are an inevitable part of life, how can we use this to advantage? First, by not complaining when costs rise, income falls, the days get shorter, people get sick or have several examples of 'bad luck' in a row. According to the law of cycles bad conditions will improve, so patience is better than complaint. The idea of cycles shows the importance of timing. When times are good it is wise to prepare for times of difficulty. Governments have found it difficult to follow that advice, but there is good reason for individuals to do this, and many people do.

The other advantage of timing with cycles is that our abilities and talents can also rise and fall over time. We try to pick a time when we feel physically strong to do demanding, strenuous work. We buy a stock when we see its value rising. Even events like meetings can go through positive and negative phases. If this is recognized in advance, it could be possible to stop a meeting when people are getting tired and have more difficulty finding agreement, and meet again later.

Discussing the law of cycles may be especially appropriate now. People have become used to steadily increasing government spending, both federal and territorial, and there may be some shock and anger over spending cuts. However, it is doubtful that governments know why our society behaves as it does, any more than the hare population does. A law can only be turned to human use when it is recognized and taken into our planning. And so both the human and hare populations will continue to be affected by the law of cycles for years to come. But the hares will feel the full effects of cyclic upturns and downturns, while we if we use our knowledge of cycles to advantage can turn potential problems into opportunities.

   
   

 

 
   
 

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